one being closely connected with the former management of the railway as well as deeply interested in it pecuniarily, and bound up in interest with its chief financial promoters and managers, and the other occupying relations hardly less free from objection. (2) The interests of creditors could not have been made the primary consideration in the appointment of receivers, because they were not advised of the application, though the trustees of the latest general mortgage were in point of form advised, but they did not extend the notice to bondholders; and because the persons appointed were not representative of the wishes or interests of the lien creditors of the road, but the friends and choice of those who had managed the road.
It will, therefore, be seen how completely the ordinary conditions were here disregarded. It was plainly the opening of a new chapter. There had previously been one proceeding similar in some respects to the Wabash case in the United States District Court for Connecticut, but only one, and that not a close nor conspicuous precedent.[1]
In 1886, the Circuit Court of the United States for the District of Illinois removed the original Wabash receivers from their position as receivers of the lines of railway belonging to the system east of the Mississippi River, and appointed a new receiver for those lines.[2] In the course of the opinion of the court in this case, it was remarked: —
"It has frequently been deemed necessary, in suits against insolvent railway corporations, to foreclose mortgages, to appoint receivers to operate and protect the property, pending the litigation; but it is unusual and novel, to say the least, to entertain a bill filed by such a corporation against its creditors, and at once, without notice, place the property in the hands of one or more of the directors whose management has been unsuccessful. Receivers should be impartial between the parties in interest; and stockholders and directors of insolvent corporations should not be appointed, unless the case is exceptional and urgent, and then only on the consent of parties whose interests are to be intrusted to their charge."
Upon the application of the receiver appointed by the Circuit Court in Illinois for possession of the lines east of the Mississippi
